U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                 FORM 10-QSB

                                  (Mark One)

[x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2000

[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D)
 OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________

                         Commission file number 0-17232

                          CAPITAL RESERVE CORPORATION
                      Exact name of small business issuer
                          as specified in its charter)

COLORADO                               84-0888594
State or other jurisdiction            (IRS Employer
Of incorporation or organization       Identification No.)

                              335 25th STREET, S.E.
                             CALGARY, CANADA T2A 7H8
                    (Address of principal executive offices)

                                 (403) 204-0260
                          (Issuer's telephone number)

NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)

Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period
that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for
the past 90 days.

Yes _X_ No __

State the number of shares outstanding of each of the
issuer's classes of common equity, as of the last
practicable date:

6,029,726 shares of common stock, no par value,
as of August 7, 2000.

Transitional Small Business Disclosure Format
(check one):  Yes___ No _X_

PART I FINANCIAL INFORMATION

ITEM I FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated
financial statements have been prepared in
accordance with generally accepted accounting
principles for interim financial information and
with the instructions for Form 10-QSB and Rule 10-
01 of Regulation S-X.  Accordingly, they do not
include all of the information and footnotes
required by generally accepted accounting
principles for complete financial statements. In
the opinion of management, all adjustments
considered necessary for a fair presentation have
been included. All such adjustments are of a
normal recurring nature.  Operating results for
the six month periods ended June 30, 2000 and 1999
are not necessarily indicative of the results that
may be expected for the year ending December 31,
2000.  For further information, refer to the
consolidated financial statements and footnotes
thereto included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1999.

                                               Page

Independent Auditors' Review                      3

Consolidated Financial Statements

Balance Sheet                                     4

Statements of Operations                          5

Statements of Stockholders' Equity                6

Statements of Cash Flows                          7

Notes to Consolidated Financial Statements  8 to 11


Review Report of Independent Certified Public
Accountant

Board of Directors
Capital Reserve Corporation

We have reviewed the accompanying balance sheet of
Capital Reserve Corporation as of June 30, 2000,
and the related statements of operations and cash
flows for the three and six months then ended in
accordance with Statements of Standards for
Accounting and Review Services issued by the
American Institute of Certified Public
Accountants.  All information included in these
financial statements is the representation of the
management of Capital Reserve Corporation.

A review of interim financial statements consists
principally of inquiries of Company personnel
responsible for financial matters and analytical
procedures applied to financial data.  It is
substantially less in scope than an audit
conducted in accordance with generally accepted
auditing standards, the objective of which is the
expression of an opinion regarding the financial
statements taken as a whole.  Accordingly, we do
not express such an opinion.

Based on our review, we are not aware of any
material modifications that should be made to the
accompanying financial statements in order for
them to be in conformity with generally accepted
accounting principles.




Miller and McCollom, CPA's


                   CAPITAL RESERVE CORPORATION
                   Consolidated Balance Sheet
                          June 30, 2000
<TABLE>
ASSETS
<CAPTION>
CURRENT ASSETS                                               <C>
<S>
 Cash                                                          $
                                                          25,275
 Accounts receivable                                      96,590
 Loans receivable                                        293,445
 Prepaid expense                                          32,450

     Total current assets                                447,760

LOANS RECEIVABLE - LONG TERM                             699,477

FIXED ASSETS
 Oil and gas leases                                      623,420
 Buildings                                               549,636
 Leasehold improvements (net of accumulated               30,247
depreciation of $2,535)
 Office equipment and computers (net of accumulated       24,457
depreciation of $1,684)

     Total fixed assets                                1,227,760

     Total assets                                     $2,374,997

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable                                     $   26,330
 Accrued expenses                                         15,058
 Current portion of long-term debt                        46,899

     Total current liabilities                            88,287

 Advances payable                                         86,750
 Shareholders' deposits                                  573,179
 Long-term debt                                          539,976


     Total liabilities                                 1,288,192


STOCKHOLDERS' DEFICIT (Notes 1, 4 and 5)
 Class A common stock - authorized 20,000,000 shares
  of no par value; issued and outstanding 5,313,922    4,791,832
  shares
 Accumulated deficit                                  (3,705,027)

     Total stockholders' equity                        1,086,805

Total liabilities and stockholders' equity            $2,374,997
</TABLE>

These notes to these financial statements should be
read in conjunction with the Audited Financial
Statements for the fiscal year ended
December 31, 1999.


                   CAPITAL RESERVE CORPORATION
              Consolidated Statements of Operations
             Six Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
                            For the Three       For the Six Months
                               Months           Ended June 30
                            Ended June 30
                           --------------
                           2000     1999        2000        1999

<S>
Revenue                      <C>    <C>         <C>         <C>
 Oil and gas revenue            $   $           $           $
                           11,942   -           11,942      -
 Operating costs            7,091   -           7,091       -


     Gross Profit           4,851   -           4,851       -

 Rental income                  $   $           $           $
                           43,505   -           68,505      -
 Cost of goods sold        24,385   -           39,904      -


     Gross Profit          19,120   -           28,601      -

 Interest income           25,091   -           25,679      -

Expenses
 General and              193,014   26,730      381,608     54,101
administrative


     Total expenses       193,014   26,730      381,608     54,101


Income (Loss) before
income taxes             (143,952) (26,730)    (322,477)   (54,101)
     Income taxes               -   -           -           -


Net income (loss)       $(143,952)$(26,730)   $(322,477)  $(54,101)
Net income(loss)per
common share            $    (.04)$   (.02)   $    (.10)  $   (.04)

</TABLE>


The notes to these financial statements should be
read in conjunction with the Audited Financial
Statements for the fiscal year ended
December 31, 1999.


                   CAPITAL RESERVE CORPORATION
         Consolidated Statements of Stockholders' Equity
            Six Months Ended June 30, 2000, and 1999

<TABLE>
<CAPTION>               Class A          Class B
                         Stock           Stock
                         Common          Preferred



                                                           Accumulated
<S>                Shares    Amount      Shares    Amount     Deficit
                      <C>    <C>         <C>       <C>        <C>

December 31, 1997  546,045   3,138,102   250,000   50,000    (3,166,302)
Issuance of
common stock,
net of offering
cost of $4,940     250,000   20,060      -         -          -

Net (loss)               -   -           -         -          (43,331)

December 31, 1998  796,045   3,158,16    250,000    50,000  (3,209,633)

Conversion of
Class B
preferred stock
into common stock   200,000   50,000    (250,000)   (50,000)    -

Issuance of
common
stock, net of
offering cost
of $3,650         1,183,820  166,732    -            -          -

Net (loss)          -           -       -            -       (172,917)


Dec 31, 1999      2,179,865 3,374,894   -             -      (3,382,550)

Issuance of
common
stock to acquire
oil and
gas leases           817,050  408,525    -            -       -

Issuance of
common stock,
net of offering
cost of $64,800    1,541,494  910,315

Issuance of
shares for
services rendered    775,513   98,098

Net income (loss)           -        -           -         -   (322,477)


                   5,313,922   $4,791.832        -     $   -  $(3,705,027)
</TABLE>


The notes to these financial statement should be
read in conjunction with the Audited Financial
Statements for the fiscal year ended
December 31, 1999.



                   CAPITAL RESERVE CORPORATION
              Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                            For the Six Months
                                              Ended June 30,
                                             2000      1999
<S>
Cash From Operating Activities:               <C>      <C>
 Net income (loss) from continuing
operations                                 $(322,477)  $(54,101)
 Reconciling adjustments
  Depreciation and amortization                4,236          -
  Issuance of shares for services             98,098
  Acquisition of property                    408,525
 Changes in operating assets and
liabilities
  Accounts receivable                         36,279    (17,500)
  Loans receivable                          (992,923)         -
  Prepaid expenses and deposits               15,960          -
  Accounts payable and accrued expenses       40,295      3,560


     Net cash flows from operating          (712,007)   (68,041)
     activities

Cash From Investing Activities:
 Acquisition of oil and gas properties      (623,420)         -
 Acquisition of property and equipment      (608,576)         -
 Proceeds from (payments to
 advances payable                           (68,250)          -
 Proceeds from investor deposits             573,179

     Net cash flows from
 investing activities                       (727,067)         -

Cash From Financing Activities:
 Long term debt                              539,976          -
 Issuance of common stock                    975,117     61,500
 Offering costs                             (64,800)     (3,650)

     Net cash flows from
 financing activities                       1,450,293    57,850

Net change in cash and cash equivalents       11,219    (10,191)
Cash at beginning of period                   14,056     11,517

Cash at end of period                      $ 25,275    $  1,326

</TABLE>

The notes to these financial statements should be
read in conjunction with the Audited Financial
Statements for the fiscal year ended
December 31, 1999.



CAPITAL RESERVE CORPORATION
CAPITAL RESERVE CORPORATION
Notes to Consolidated Financial Statements

June 30, 2000


Note 1 - Management's Statement


In the opinion of management, the accompanying
unaudited consolidated financial statements
contain all adjustments (all of which are normal
and recurring in nature) necessary to present
fairly the financial position of Capital Reserve
Corporation as of June 30, 2000, and the results
of operations for the three months and six months
ended June 30, 2000 and 1999 and cash flows for
the six months ended June 30, 2000, and 1999.  The
Notes to Consolidated Financial Statements, which
are contained in the Form 10-KSB for the period
ending December 31, 1999, should be read in
conjunction with these consolidated financial
statements.

For the purposes of consolidation the exchange
rate of .67440 from Canadian to U.S. dollars has
been applied as at June 30, 2000.  Any
transactions completed prior to June 30, 2000 are
accounted at the then prevailing exchange rate as
at the date of the transaction.

Organization

The Company was incorporated in Colorado in 1982,
and operated as an insurance agency and a life
insurance company.  The insurance business was
sold in 1994.

The Company had minimal operating revenues after
the sale of its life insurance company and rental
property.  Management attempted to start a
financial consulting and public relations
business.  The Company entered into its first
consulting agreement in January 1997, which
expired in 1998.  The Company virtually had no
operations from the end of 1998 until late 1999.
During that time, the Company attempted to locate
appropriate acquisition or merger candidates.  In
1999, the Company's principal place of business
moved to Canada.  In November 1999, the Company
formed a wholly-owned subsidiary, Capital Reserve
Canada Limited, an Alberta corporation ("Capital
Canada"), to locate and acquire producing oil and
gas assets in Canada.

Operations


Lease Agreement/Acquisition of Commercial
Property:  During the quarter ended March 31,
2000, Capital Canada entered into a five-year
lease agreement for 14,107 square feet of office
and laboratory space in Calgary, Alberta.  The
lease agreement included an option to purchase the
building on or before July 31, 2000. The building
is a total of 22,507 square feet and the purchase
price is $1,552,275.  Capital Canada gave
notification to the landlord of its intent to
purchase the building on June 30, 2000. Under the
terms of the purchase option, the landlord will
apply 50% of the basic rent paid for a period of
six months to the purchase price.  The landlord,
Capital Canada and the Company have agreed to
extend the closing date to August 31, 2000. The
Company has applied for financing of $1,079,040
($1,600,000CDN) to close the purchase.  In
consideration for the extension to August 31, 2000
the Company placed the down payment of $378,876
($559,722 CDN) in trust and agreed to a penalty of
$67,440 ($100,000.00CDN) should it fail to close
on or before August 31, 2000.  For the purposes of
this statement, there has been no accrual made
against commitments and contingencies to reflect
the option to purchase.  See below, "Note 2 -
Commitments and Contingencies".  As at June 30,
2000 Capital Canada had sublet approximately 9,633
square feet of the building to three tenants under
sublease arrangements resulting in monthly
payments of $14,195.

Oil and Gas Acquisition:  During the quarter ended
March 31, 2000, Capital Canada also acquired a 5%
percent working interest in producing oil and gas
leases and a processing facility located in
Alberta, known as Chestermere, for total cash and
stock consideration of $612,787 ($900,000 CDN).
The Company agreed to issue a total of 817,050
shares of common stock at $0.50 per share and paid
a cash payment of $204,262.

The cash portion of the consideration was raised
from a $689,900 ($1 million CDN) credit facility
provided by Alberta Treasury Branch to Capital
Canada.

Acquisition of Residential Property:  In
connection with the Consulting Agreement agreed to
between the Company and its President, Mr. W.
Scott Lawler (see " - Consulting Agreements"
below), the Company purchased a home in the City
of Calgary for Mr. Lawler's personal use.  The
purchase price of the home was $550,015
($815,000CDN).  The Company assumed a variable
interest rate mortgage from Alberta Treasury
Branch in the amount of $384,554 amortized over 25
years.  On May 1, 2005, the loan can either be
repaid or renewed with the interest rate converted
to the then prevailing rate.  Title to such
property is in the name of the Company.  Mr.
Lawler provided funds to the Company in the amount
of $167,842 to pay for the down payment and all
closing costs associated with the purchase.  The
funds were provided in the form of a subscription
for shares of the Company's common stock.  See
"Note 3 - Private Placements of Common Stock."
The monthly payments of principal and interest are
$2,636, which Mr. Lawler is obligated to make,
along with all payments for property taxes,
property insurance and maintenance.



If and when the property is sold, the Company will
receive any and all gains (and/or losses) from
such sale, less the cost of any pre-approved
improvements to the property paid for by Mr.
Lawler.  However, Mr. Lawler has the option of
acquiring title to the property (and thus all
resulting gains or losses) by: (a) assuming or
paying off the Company's mortgage; and (b)
surrendering to the Company the 167,842 shares of
common stock obtained from the Company in a
private placement. See "Note 3 - Private
Placements of Common Stock."

Consulting Agreement

As of April 24, 2000, the Company entered into a
Consulting Agreement with its President and a
member of its Board of Directors, Mr. W. Scott
Lawler, pursuant to which Mr. Lawler agreed to
relocate to Calgary, Alberta, Canada, to work at
the Company's facilities in Calgary and devote
more substantial time to the operations of the
Company.  The term of the Consulting Agreement is
two (2) years, with an option on Mr. Lawler's part
to extend for one (1) additional year.  Mr. Lawler
will receive an annual salary of $75,000.00, plus
stock options (at terms yet to be determined) and
automatic annual salary increases of fifteen
percent (15%).  As a further inducement to Mr.
Lawler to move to Calgary on the Company's behalf,
the Company purchased a home for Mr. Lawler's
personal use.  In turn, Mr. Lawler is responsible
for all payments on the mortgage, for property
insurance, for property taxes and for maintenance.
Mr. Lawler provided the down payment and the
closing costs associated with the purchase.   See
" - Acquisition of Residential Property" above.

Use of Estimates

The preparation of the Company's financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the amounts
reported in these financial statements and
accompanying notes.  Actual results could differ
from those estimates.

Basis of Consolidation

The consolidated financial statements include the
Company and its wholly-owned subsidiary, Capital
Reserve Canada Limited.  All significant inter-
company accounts and transactions have been
eliminated.

Depreciation

Depreciation has been provided in amounts
sufficient to relate the costs of depreciable
assets to operations over their estimated useful
lives principally on the straight-line method from
two (2) to five (5) years.

Treasury Stock

Treasury stock has been treated as common stock
redeemed and canceled consistent with the Colorado
Revised Statutes.

Earnings (Loss) Per Share

Earnings (loss) per share of common stock is
computed based on 3,242,570 and 1,339,691 weighted
average number of common shares outstanding during
the six (6) month periods ended June 30, 2000 and
1999, respectively.  Fully diluted earnings per
share are not presented because they are anti-
dilutive.

Note 2 - Commitments and Contingencies

Effective January 15, 2000, the Company's wholly-
owned subsidiary, Capital Canada, an Alberta
corporation, entered into a five-year
non-cancellable operating lease which provides for
monthly lease payments, including operating costs,
of $14,801.  Minimum future rental payments under
this lease with remaining terms in excess of one
year are as follows.

2001             $177,617
2002             $177,617
2003             $177,617
2004             $177,617

See "Note 1 - Operations - Lease
Agreement/Acquisition of Commercial Property"

Note 3 - Private Placement of Common Stock

During the fiscal year ended December 31, 1999,
the Company offered for sale up to 2,000,000 units
of common stock pursuant to Rule 506 promulgated
by the Securities and Exchange Commission under
the Securities Act of 1933 at $0.50 per unit, each
unit consisting of one share and one warrant to
acquire a like number of additional shares of
common stock at $1.00 per share.  As of June 30,
2000, the offering was over-subscribed and the
Company had received a total of $1,412,415 in
subscription deposits (net of refunded
subscriptions).  The Company elected to exercise
its right under the terms of the offering to
accept only a portion of each subscriber's
subscription, and to allow each of them to apply
the un-accepted portion towards the purchase price
of the warrants issuable with the accepted portion
of their subscriptions.  As at June 30, 2000, the
offering was fully subscribed and subscribers had
elected to exercise a total of 415,730 warrants.
As at June 30, 2000 a total of 744,238 common
shares remained reserved for issue under the
offering.  The total net proceeds to the Company
from this offering, including $415,730 from the
exercise of warrants and net of commissions and
finders fees, was $1,350,930.

In connection with the purchase of real estate
discussed above (See "Note 1 - Operations -
Acquisition of Residential Property"), the
Company's President, Mr. W. Scott Lawler provided
the Company with funds in the aggregate amount of
$167,842.  These funds were used by the Company to
cover the down payment and closing costs
associated with such purchase.  Subsequent to the
quarter ended June 30, 2000, the Company and Mr.
Lawler agreed that such funds would be used by the
Company as subscription proceeds from Mr. Lawler
to purchase 167,482 shares of the Company's common
stock at $1.00 per share.  The shares are to be
issued pursuant to the exempt from registration
found in Rule 506 promulgated by the Securities
and Exchange Commission  under the Securities Act
of 1933.  The net proceeds to the Company realized
from this offering was $167,842, as this offering
was made without the use of any agent or salesman
and was conducted without any costs, commissions
or finders' fees.

Note 4 -Loans Receivable & Loans Receivable - Long
Term


Loans   Receivable  of  $293,445  represents   the
current  portion  of  monies advanced  to  various
unrelated   corporations.   These   amounts   bear
interest   calculated  on  the  daily  outstanding
principal at 2% above prime
rate and have terms of three years from date of
the loan.  Repayment terms are annually on the
last day of each year.

Loans Receivable - Long Term of $699,477
represents the long term portion of monies
advanced to various corporations. These amounts
bear interest calculated on the daily outstanding
principal at 2% above prime rate and have terms of
three years from the date of the loans.  Repayment
terms are annually on the last day of each year.

Note 5 -Long Term Debt

The  Company's subsidiary, Capital  Canada  has  a
$674,400  ($1  million CDN) demand revolving  bank
term facility with a Canadian banking institution.
Under the terms of the agreement, the facility  is
initially  capped at $202,320 ($300,000  CDN)  and
will   increase  pending  successful  closing   of
certain oil and gas leases currently under review.
This  capped  amount  has  been  drawn  upon   and
represents  $202,320  of the amount  of  long-term
debt  reflected on the consolidated balance  sheet
of  the  Company.  The loan bears interest at  the
Bank  of Canada prime rate plus 1% payable on  the
last  day  of  each  month.  The revolving  credit
facility  is  subject  to  an  annual  review  and
specifies  no  repayment  terms  provided  certain
covenants  related to the facility  are  met.   As
collateral security the Company's subsidiary,  has
pledged  a  $3,372,000 ($5 Million  CDN)  floating
charge debenture over all of its assets.

Note 6 - Advances Payable

Advances Payable of $86,750 are advances from
various unrelated parties that bear no interest
and have no stated terms of repayment.
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION

GENERAL

Capital Reserve Corporation (the "Company") was
incorporated under the laws of the State of
Colorado on August 3, 1982.  The Company is in the
business of investments in oil and gas projects
and real estate.

As of June 30, 2000, the Company has one (1)
wholly-owned subsidiary, Capital Reserve Canada
Limited, an Alberta corporation ("Capital
Canada").  Capital Canada was incorporated on
December 8, 1999 and is in the business of
locating and acquiring oil and gas properties. The
Company's other subsidiary, Wall Street
Investments Corp. had no activity for the last two
(2) years and has been dissolved.

On March 1, 2000, the Company's wholly-owned
subsidiary, Capital Canada, entered into an Asset
Purchase Agreement (the "Asset Agreement") with
Stone Canyon Resources Ltd., an Alberta
corporation, ("SCR").  Pursuant to the Asset
Agreement, Capital Canada acquired all of the
interests held by SCR in certain producing oil and
gas leases and a processing facility located in
Alberta, Canada, known as Chestermere.  The
purchase  price for this acquisition was $612,787
($900,000 CDN) which was paid as follows: $204,262
($300,000 CDN) in cash and $408,525 ($600,000 CDN)
in shares of common stock of the Company, valued
at $0.50 US per share which per share price was
converted to Canadian dollars by the average of US
dollar buy and sell rates of the end of business
on the date immediately preceding the closing of
the Asset Agreement.  The closing was held on
March 21, 2000.  The Company issued 817,050 shares
in connection with this transaction on June 8,
2000.

As of June 30, 2000, the Company had funded, by
way of repayable loans, $505,806 for the
development of a heavy-oil upgrading technology.
The Company made these funds available to
Texas T Petroleum Ltd., a Colorado corporation, of
which Mr. James F. Marsh is president and a
director; Mr. Marsh is also the president and a
director of Capital Canada. Texas T Petroleum Ltd.
holds an option to purchase up to fifty percent
(50%) of the outstanding shares of Carbon
Resources Limited, a Cyprus corporation (CRL).
CRL holds the rights to a proprietary patented
technology believed to be able to reduce by up to
seventy percent (70%) the costs associated with
upgrading heavy crude oil to light crude oil.  In
order to exercise the option and acquire the
shares Texas T must fund a total of $900,000.  As
at June 30, 2000, Texas T had funded $860,022
which is secured by an assignment of Texas T's
option to acquire an interest in the technology.

As of June 30, 2000, the Company had also funded
to SCR, by way of repayable loans, $430,814 for
working capital to allow for development of a gas-
to-liquids technology.    The loan accrues
interest at the rate of 2% over prime.  Subsequent
to the quarter ended June 30, 2000, SCR repaid the
principal amount of such loan plus all accrued
interest thereon.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital at June 30, 2000,
was $359,473 as compared to $2,278 at June 30,
1999.  A majority of the Company's current assets
are in the form of accounts receivable and loans
receivable. Since the Company does not have
extensive sources of revenue, working capital
could be depleted by operating expenses.
Furthermore, if the Company should generate an
operating loss for the current year comparable to
the loss incurred for the year ended December
31,1999, a substantial portion of the Company's
remaining cash and working capital will be
depleted.  The Company had current liabilities of
$88,287 at June 30, 2000, as compared to $16,548
at June 30, 1999.

RESULTS OF OPERATIONS

The Company had total revenues of $106,126 for the
six (6) months ended June 30, 2000.
Comparatively, for the six months ended June 30,
1999, the Company had no revenues.  The Company's
revenues from the current quarter were not
sufficient to meet its total operational expenses.
The Company's sources of revenue are limited to
monthly rental income of $14,195, interest income
of approximately $8,000 per month and less than
$3,000 per month from a 5% working interest in oil
and gas leases and a process facility, known as
Chestermere.

Most of the monthly rental income ($12,500 of a
total of $14,195) is associated with a five (5)
year written sublease agreement.  The Company has
two (2) other written sublease agreements (one
that expires in  April 2001 and the other expires
in January 2005), which have in the aggregate
monthly rental income of $1,700. The Company
incurred cost of goods sold associated with the
rental income for this quarter in the amount of
$24,385, which amount represents a pro rata
portion of the Company's obligations under its
lease.  While the income from the first sublease
meets the Company's monthly obligations under its
lease agreement, there is no assurance that these
relationships will continue beyond their current
and respective terms.

The Company has shown on its statements of
operations as interest income the amount of
interest that has accrued on the promissory notes
it holds from Texas T Petroleum Ltd. and SCR
during the quarter ended June 30, 2000. $14,566
has accrued on the note from Texas T Petroleum and
$10,525 has accrued on the note from Stone Canyon
Resources.

As the result of the sale of its securities in a
private placement, which was commenced in fiscal
year 1999 (see "ITEM 2.  CHANGES IN SECURITIES"),
the Company received $754,705 in gross proceeds
during the quarter ended June 30, 2000, and
$1,412,415 in gross proceeds for the six (6) month
period ended June 30, 2000.

The Company intends to remain involved in Texas
T's funding of the development of a heavy-oil
upgrading technology, which is believed to reduce
the costs of upgrading heavy crude to light crude
oil by 70%.  Texas T's funding of such technology
will result in ownership of fifty percent (50%) of
the entity that owns such technology, Carbon
Resources Limited. As of June 30, 2000, the
Company has funded $505,806. The Company's
continued involvement in this project will require
the Company to provide additional funds. The
amount of such additional funds has not been
determined at this time.

The Company, most likely, will need to attempt to
raise additional funds from equity sales,
borrowings, joint ventures or merger/acquisition
candidates to meet the funding needs of this
project and also its operating expenses.

General and administrative expenses for the six
(6) months ended June 30, 2000 were $381,608
compared to $54,101 for the same period in the
previous year.

The net loss from continuing operations for the
six (6) months ended June 30, 2000, was $322,477
compared to $54,101 for the same period in the
previous year.

PART II  OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

Not Applicable.

ITEM 2.      CHANGES IN SECURITIES

On July 22, 1999, the Company commenced a private
placement offering, pursuant to Rule 506
promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, of up
to 2,000,000 of its units, with each unit
comprised of one share of common stock and a
warrant to purchase an additional share for $1.00.
As of March 31, 2000, the offering was over-
subscribed and the Company had received $1,412,415
in subscription deposits.  During the quarter
ended June 30, 2000, the Company elected to
exercise its right under the terms of the offering
to accept only a portion of each subscriber's
subscription, and to allow each of them to apply
the un-accepted portion towards the purchase price
of the warrants issuable with their subscriptions
to date.  As a result, the subscribers had elected
to exercise a total of 415,730 warrants.  The
total proceeds to the Company from this offering,
including $415,730 from the exercise of warrants,
and net commissions and finders fees, was
$1,350,930.

On March 21, 2000, the Company's wholly-owned
subsidiary, Capital Canada, purchased an interest
in certain oil and gas producing leases and a
process facility located in Alberta, Canada, known
as Chestermere. As part of the consideration for
this purchase, the Company, on June 8, 2000,
issued 817,050 shares of it's common stock.  "ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION - GENERAL".

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS

Not Applicable

ITEM 5.   OTHER INFORMATION

The Company's wholly-owned subsidiary, Capital
Canada, acquired approximately 14,107 square feet
of office and laboratory space in Calgary, Alberta
Canada, pursuant to a written five (5) year lease
agreement. The lease agreement provides that
Capital Canada would make lease payments totaling
$160,520 during the fiscal year ending December
31, 2000, and $177,617 each fiscal year
thereafter. Capital Canada also has the right to
purchase the premises (consisting of a total of
approximately 22,507 square feet) at a price of
$1,552,275.  On June 30, 2000, Capital Canada gave
notification to the landlord of its intent to
purchase the building.  The landlord and Capital
Canada have agreed to extend the closing date of
the purchase to August 31, 2000. In the event
Capital Canada elects to purchase the premises,
fifty percent (50%) of six months of its basic
rent payments would be credited towards the
purchase price. The portion of the building
currently not occupied by Capital Canada is
subject to a lease agreement between the landlord
and Toshiba, to which  the purchase of the
building would be subject. It is Capital Canada's
understanding that such lease  is to expire in
fiscal year 2005.

Capital Canada has also agreed with the landlord
to add 1,835 square feet of office space in the
building to the lease. This agreement is effective
August 1, 2000 and will be sublet to an existing
sub-tenant.

Capital Canada has entered into written sublease
agreement with a five (5) year term to sublet
4,345 square feet of its office space and 3,950
square feet of its laboratory facilities at the
Calgary facilities for a term of five years, at
the monthly rate of $12,500.  Such sublease shall
meet nearly all of Capital Canada's total lease
obligations during fiscal year 2000.  In addition,
such sublease agreement shall remain in place in
the event Capital Canada elects to purchase the
premises.  Capital Canada has entered into two (2)
other written sublease agreements, one for a one
(1) year term and the other for a five (5) year
term.  Collectively, such subleases have monthly
lease rates of $1,700.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A)  Exhibits.

REGULATION
S-B
NUMBER  EXHIBIT                             REFERENCE

2.1     Stock Purchase Agreement dated
        July 29, 1994 (1) F1:                       N/A
3.1     Articles of Incorporation, as
        amended (2) F2:                             N/A
3.2     Amended Bylaws (3) F3:                      N/A
4.1     Form of Warrant Agreement (4) F4:           N/A
27       Financial Data Schedule                     Filed herewith
--------------------------
 FN:
 F1:
(1)  Incorporated by reference to the Exhibits
filed with the Company's Fom 8-K dated October 14,
1994.

 F2:
(2)  Incorporated  by reference to the  Exhibits
previously  filed with the Company's Annual Report
on Form 10-K for the fiscal year ended December
31, 1990.

 F3:
(3)  Incorporated  by  reference to the  Exhibits
filed with the  Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1994.

 F4:
(4)  Incorporated  by reference to the  Exhibits
filed with the Company's  Registration Statement
on Form S-18, Registration No. 33-21118-D.


NONE

SIGNATURES

In accordance with the requirements of the
Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned,
thereunto duly authorized.

CAPITAL RESERVE CORPORATION
(Registrant)

Date: August 11, 2000


By:/S/  W. Scott Lawler
President